Mekong Capital has announced that its Vietnam Azalea Fund (VAF) has successfully divested its 24.99 per cent holding in the Traphaco JSC at VND141,500 ($6.2) per share, for a total consideration of more than $64.5 million, generating a gross return multiple of 6.3x in USD.

VAF initially acquired a 5 per cent stake in Traphaco in 2007 through a pre-IPO investment, becoming the first foreign shareholder in the company. It subsequently increased its stake through several on- and off-market transactions to establish itself as a meaningful minority investor.

“We have truly valued the opportunity to be an active partner of Traphaco over the past ten years,” said Mr. Chad Ovel, Partner at Mekong Capital. “Throughout, Ms. Vu Thi Thuan, Chairwoman, and Mr. Tran Tuc Ma, CEO, have provided visionary leadership driving the company’s rapid but sustainable growth. Together with the rest of the stable and loyal senior leadership team at Traphaco, they have built a company with excellent brand integrity, products of unquestionable quality, and a first-class distribution system to reach consumers in all 63 cities and provinces of Vietnam. Traphaco is now a role model for all other pharmaceutical companies in Vietnam.”

When VAF invested in Traphaco in 2007, the company was ranked among the Top 20 pharmaceutical companies in Vietnam, with revenue and net profit of VND533 billion ($23.4 million) and VND38 billion ($1.67 million), respectively. During the lifecycle of its investment in Traphaco, VAF guided the company to develop into the second largest pharmaceutical company in the country.

As an active and value-adding shareholder to its investee companies, VAF initially focused on supporting Traphaco to build its distribution network by growing from two branches at the time of its investment to the current 24.

A second focus of VAF was to support the dramatic conversion from previously selling nearly 80 per cent of its products via wholesalers to a direct sales model reaching 26,000 retail pharmacies nationwide. In the last phase of its investment, VAF triggered a major enhancement in corporate governance by building one of the most independent and non-executive Boards of Directors among listed companies in Vietnam.

Traphaco is a vertically-integrated pharmaceutical company specializing in the development, marketing, and distribution of traditional Vietnamese medicines.

The company is the clear leader in sector and the second-largest pharmaceuticals manufacturer in Vietnam in terms of revenue and net profit. It possesses a strong brand, two GMP-WHO manufacturing factories, and a nationwide distribution network with 24 distribution branches.

The Vietnam Azalea Fund was launched in June 2007 to focus on pre-IPO investments. It made seven investments, in PNJ, FPT Corp., Intresco, Nam Long, Masan Consumer, Loc Troi, and Traphaco. Traphaco was its last remaining investment, and with the exit the fund has now fully divested from its portfolio companies.